Islamic capital markets: An ever-expanding frontier

Author: IFLR Correspondent | Published: 9 Sep 2019

By Rafiq Jaffer, head of debt capital markets, Al
Tamimi

Islamic finance structures are based on the precepts of the
shariah. Broadly speaking, the shariah is the body of Islamic
jurisprudence that regulates various aspects of life including
politics, economics, and succession. In the context of finance,
the shariah prescribes certain prohibitions, which
constitute the main principles of Islamic finance. These
prohibitions relate to the charging of interest
(riba), uncertainty (gharrar) in contracts,
contracts relating to gambling (qimar) and contracts
pertaining to unethical investments. In addition, Islamic
finance transactions are required to have a linkage to an
underlying tangible asset (commodities, vehicles, real estate
etc.)

In other words, an Islamic finance transaction will
typically involve the sale of an asset, the lease of an asset,
or participation in a joint venture or partnership involved in
an operating or new business venture.